The European Union has just joined Australia and China in banning Boeing’s 737 Max 8 jetliner from their airspace, after Britain, France and Germany individually did so earlier Tuesday. This is likely to lead to greater pressure for a worldwide grounding of the aircraft. That will have big consequences for Boeing for the aviation industry, and perhaps for the U.S. economy.
The ban is a response to two crashes
The nations that have banned the 737 Max from their airspace are responding to Sunday’s horrific crash. Ethiopian Airlines Flight 302 had just left Addis Ababa for the Kenyan capital of Nairobi when it reported technical problems and requested permission to turn back. Its wreckage was found moments later on the outskirts of Africa’s political hub, near the small town of Bishoftu. Everyone on board was killed.
The crash marks the second time in five months that this new type of Boeing aircraft was involved in a fatal crash. In October, another 737 Max belonging to Indonesian low-cost giant Lion Air plunged into the sea, killing 189 passengers and crew.
Big money is at stake
Sunday’s crash was an enormous tragedy, which killed, among others, many humanitarian workers and aid professionals. Yet there is also another dimension to the crash: money. The 737 has long been one of Boeing’s best-selling products. First introduced in 1968, thousands of these airplanes have been sold to date. The Max — a newer, more fuel-efficient version of the original 737 — is particularly important for Boeing. With global airlines expected to buy over 37,000 airplanes — valued at over $5 trillion — over the coming decades, Boeing sees the Max as key to winning the jet order arms race against its European rival, Airbus. The world’s dominant plane makers have long been locked in a tussle for market share.
Sales in the Asian Pacific market are particularly important to Boeing. According to the International Air Transport Association (IATA), an airline trade group, the region will be the biggest driver of air travel demand over the next decade with over half of all new passenger traffic coming from countries including Indonesia and China. Since Sunday’s crash, the Max has been banned from operating in both countries. The move by Chinese authorities is particularly worrying given the country already operates one of the largest fleets of the 737 Max in the world. The Chinese air safety regulator said the move was in line with its principle of “zero tolerance of safety hazards.” Now, the swift action from the E.U., together with tweeted complaints from President Trump, may transform a regional market crisis into a global one.
Regulators’ response has been mixed
On Monday, U.S. Transportation Secretary Elaine Chao told reporters, “If the Federal Aviation Administration (FAA) identifies an issue that affects safety, the department will take immediate and appropriate action.” Chao’s Canadian counterpart — Minister Marc Garneau — voiced similar sentiments. Garneau’s comments come as his country’s flag carrier sought to reassure nervous travelers. In a statement, Air Canada — which operates 24 of the Max jets — said, “These aircraft have performed excellently from a safety, reliability and customer satisfaction perspective.”
However, one member of an influential U.S. air safety group sounded the alarm. Paul Hudson — a member of the FAA Aviation Rulemaking Advisory Committee — said the agency’s “’wait and see’ attitude risks lives as well as the safety reputation of the U.S. aviation industry.” Hudson called for the immediate grounding of the Boeing 737 Max. So did Jim Hall — the former head of the National Transportation Safety Board — as did Sen. Richard Blumenthal.
Blumenthal (D-Conn.) on Monday said the planes “should be grounded until the FAA can assure American travelers that these planes are safe.” On Tuesday, other U.S. lawmakers joined the chorus, calling on the FAA to take action.
It will take time to figure out what happened
Crash investigators are expected to comb through the wreckage looking for clues. However, a report summarizing their findings is unlikely to be made public anytime soon. Investigations can often take months, if not years. In the meantime, back-to-back crashes of American-made airplanes may have political ramifications.
For one thing, these events undercut Trump’s claims that his policies have made flying safer than ever. In a widely reported 2017 tweet, the president claimed that air safety had improved because he’d been “very strict on commercial aviation.” Defensiveness over these comments may explain why he on Tuesday complained that “airplanes are becoming far too complex to fly.”
If Boeing aircraft sales are suspended, there are likely to be indirect consequences for American jobs. Following October’s Lion Air crash, the airline threatened to cancel over $22 billion worth of jet orders. If airlines start to believe that there is something inherently wrong with Boeing’s prized offering — or, even worse, if consumers start to identify the new 737 models as unsafe — it will have serious ramifications for Boeing.
Ashley Nunes studies regulatory policy at MIT.